Safeway shoppers should check in with their local grocery store to see if it will remain open in light of supermarket chain Sobeys’ decision to close 50 of its most “underperforming” grocery stores across Canada.
Sobeys is the country’s second-largest supermarket chain, behind Superstore. Following the $5.8 billion acquisition of Safeways across Canada Sobeys has identified 50 “consistently underperforming” stores across the country.
The majority of the Safeway closures, about 30, will be in Western Canada said the Nova Scotia-based company in an earnings release on Thursday.
Sobeys is paying about $170 million in severance costs, real estate writedowns and other related one-time costs. But what these closures will mean for the company is shaving hundreds of millions off operating costs and hope for bigger profits down the line.
“This rationalization will strengthen the quality of Sobeys’ store network and is expected to improve net earnings as a result of cost savings,” Sobeys’ earnings release said.
Despite Sobeys reporting a 37 per cent jump in profit between February and April, totalling earnings of $131 million (up from the previous year’s $95 million) plus an extra $6 billion of padding in sales from Safeway the grocery company is likely still feeling the heat of competition from U.S.-based supergiants Walmart and Target.
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